Property consultant Cushman and Wakefield said office space vacancy in the Metro Manila is expected to increase in the coming months.
The property consultant said that while vacancy in the Prime and Grade ‘A’ Office spaces was at 16.3 percent in the fourth quarter, a marginal decrease from the previous quarter’s rent of 16.8 percent, the large volume of office space expected to be completed in the first half of 2024, as well as the proposed amendments to legislation that will allow for the IT-BPM sector to operate on a more flexible work-arrangement, vacancies are projected to increase.”
Cushman and Wakefield said the fourth quarter vacancy is a six basis points (bps) decline from the prior quarter’s 16.90 percent and is a 72-bps increase the prior year’s 16.12 percent.
“The return of office space by several occupiers is still prevalent in several submarkets in Metro Manila. Nonetheless, positive absorption figures are recorded overall with roughly 38,000 square meters (sq.m.) net absorption in the third quarter, bringing the year-to-date (YTD) net absorption to roughly 130,000 sq.m.,” it said.
“The positive absorption figures are brought on by several occupiers that have relocated or consolidated their office spaces in one location to take advantage of the prevailing high vacancies,” it added.
Landlords of Prime and Grade ‘A’ office spaces meanwhile have kept their headline rates steady.
Some landlords however posted a slightly lower headline rent as of the end- fourth quarter, bringing the average asking rent of Prime and Grade ‘A’ office space to P1,023 percent per sq.m. per month.
“This figure is a 1.8 percent decrease quarter on quarter from the previous P1,042 and a 1.5 percent decrease from the reported rent of P1,038 the previous year. Despite the decrease in headline rates, the continued increase in the net absorption figures is still indicative of the continued, albeit slow, recovery of the office real estate market in Metro Manila,” Cushman and Wakefield said.
“The office real estate market in Metro Manila remains in recovery phase by end fourth quarter. While majority of the landlords in Metro Manila are keeping their headline rent steady, some had posted slightly lower rents in fourth quarter, bringing the average asking rent down by 1.8 percent to P1,023 per sq.m. per month from the previous quarter’s reported rent of P1,042 as a result of prevailing high vacancies in the market,” added Tetet Castro, Cushman & Wakefield head of tenant advisory group. – Ruelle Castro
